Your decisions play a pivotal role in cash flow, revenue and profit, and in some instances equipment leasing decisions can make the difference between business success or failure.
Equipment leases are often expensive, which is yet another reason why it’s essential to have equipment lease software to understand and manage it.
What follows is a breakdown of what equipment leasing software is, how it works and how it can help you manage and use your equipment leases as assets and business tools.
Equipment Lease Software, Equipment Management, and the Two Types of Equipment Leases
There are actually as many as five different types of equipment leases, but for most businesses there are only two you really need to know about:
An operating lease permits the use of an asset without transferring the actual ownership rights of that asset to the person—i.e., the lessor—using the asset. There are many examples of how operating leases work, but one of the most common occurs in construction, when a company needs a large piece of equipment for a specific job.
Purchasing that equipment would be prohibitively expensive, so an operating lease allows the company to use it on an ongoing period that’s specified in the lease contract until the job is finished.
At that point the piece of equipment is returned, presumably undamaged, but the terms of the lease do take into account both wear and tear and the age of the equipment being leased.
Everyone knows what a finance lease is. Like an operating lease, it allows the lessor to use the asset in question, but it also provides an option to transfers ownership of that asset when the lease has been completed.
Most of us know about financing leases from auto leases, which are one example of how a financing lease can work. Under the terms of an auto lease, the lessor gets to use the vehicle for a specified period of time, and when the lease contract ends there’s an option to buy the vehicle.
How Equipment Leasing Software Works
The basics of how equipment leasing software works are actually very simple. Payments are made according to the terms of the lease, and the software records them accordingly.
There’s a lot more to it than that, though. Equipment leases are usually based on complex contracts, and equipment leasing software also help you track other aspects of the lease:
- Insurance fees
- Maintenance and repair costs
- How often you use the equipment
- How effective the equipment is when it’s being used
- Ongoing depreciation and the current value of the equipment
All of these parameters need to be tracked by both the lessor and the lessee, and for businesses based on equipment leasing, it’s essential to have accurate numbers and assessments.
Equipment Leasing Software and Management Software: The Next Level
Tracking data is just the tip of the iceberg when it comes to what equipment software leasing can do, however. Most of the next level is about how to use the data. Here are some questions that are part of the equipment leasing software evaluation process:
- Can it be accessed by everyone in the company via a central database that is available to all departments?
- Can the software generate effective reports using leasing data that can be used by executives and managers to make effective daily and long-term decision?
Equipment leasing software can also help provide data security. Most lease equipment data is sensitive, and the software can set levels of access to protect the data.
How to Use Equipment Lease Software
Moreover, equipment lease software can also be used to analyze how efficiently a company is operating at multiple levels by answering some additional questions:
- Are all the leases in an equipment lease portfolio necessary?
- Are they all performing at an optimal level?
- How is equipment leasing affecting the balance sheet and cash flow statements?
- Are tax-related equipment expenses and benefits being optimized effectively?
- Is it possible to reduce equipment lease spending to become more efficient?
- Should lease equipment spending be increased to take advantage of a business or investment opportunity?
Equipment leasing software can help give you the answers to all these questions. It can be used in conjunction with lease accounting software and lease management software to provide benefits that even some leasing experts within a company don’t know about.
What is a Fit-Lease Solution?
There are many options when it comes to equipment leasing, and for some companies a fit-lease solution is the best option for their equipment leasing needs.
Simply put, it allows companies to pay per usage, which means there’s only a payment for a piece of equipment when it’s being used.
Once again, the construction industry provides a solid example of how this kind of leasing works. Let’s say a company has an extensive building project for which a particular type of crane is needed, but that crane is only necessary for a few days or a week or two of the project.
Rather than having to lease the crane for the entire project, and fit-lease option would allow the company to use the crane for that specific period and record the expenses accordingly.
How Asset Finance Works With Leases
There are many ways to use equipment leases as a business asset, and leasing software helps provide the ability to do it.
In the case of asset financing, a company may choose to make regular payments for a set amount of time known as the primary rental period. Those payments will cover the cost of the equipment, plus interest.
That company might then choose to extend the rental period, return the equipment, or sell the asset to a third party on behalf of the firm leasing the equipment.
Equipment leasing software is used to track and set the terms of each of those choices so that the transactions are advantageous to all parties involved.
Turn to iLeasePro for Your Equipment Leasing Solutions
At iLeasePro, we understand every aspect of equipment leasing and equipment leasing software. We can help you learn to use it, make the right choices when you set it up, and how to get the most out of your leasing equipment software.
We’ve done this for many companies, both small and large, and our expertise is unmatched. We can help you analyze your equipment lease portfolio and match your equipment leasing software to your specific business needs.
The process starts with a phone call or an email. The number is 888-351-4606, or you can contact us at firstname.lastname@example.org. We also have plenty of great information about lease accounting software on our website, which is ileasepro.com, and you can chat with a live representative there as well.